More crazy Amazon stories

"hey Jon, pretty scary numbers!

Amazon now controls 40% of e-commerce. You’d have to combine the Web sales of the next 21 retailers, including Wal-Mart, Target, Best Buy Co., Macy’s Inc. Home Depot Inc., Nordstrom Inc. and Costco Wholesale Corp. and OVER A DOZEN of others (!!!), to match Amazon’s share!

 ... Yuck...."  That's from an email Igor Shoifot wrote me a few days ago.

51% of American shoppers say they do most of their online holiday shopping on Amazon these days.  Read this Business Insider Story where I found this graph:

In addition, Amazon is probably growing faster than other retailers.  Amazon grows (year over year) by about $60 million per day, $400 million per week, and about $2 billion per month.  BIG numbers when compared to other fast-growers:

 Amazon continually optimizes on price, shipping speed (drones, a new fleet of 21 airplanes), and their assortment, for sure.  But, Amazon's innovation engine also fuels much of Amazon's growth.   Amazon consistently does things that seem senseless to most business people!  They commit to inventions years before anyone else pays attention (think Drones).

Amazon also fights and invents on a wide array of battlegrounds -- from merchandising to marketing to technology:

• 3rd Party Merchandising (they invented this category after failing in auctions ... and it redefined merchandising to some extent; Amazon was happy to earn 12% margins margins from companies like eBags or Shoes.com versus 40%; this redefined "consignment" type activity)
• Affiliate Marketing (they created a new method of referral marketing)
• Cloud Computing (Amazon invented that two years before Google -- read The Everything Store by Brad Stone) ...  Amazon's cloud product produces $8.3 billion in revenue, growing at 78% per year (growth of $7 billion per year -- which is equal to adding all the revenue from three BrownShoe/FamousFootwear/Naturalizer retail chains per year):
  
  
• eBooks and eReaders (Amazon wasn't first, but they did it best --  and they didn't give up on the concept, unlike B&N which was first of the "big retailers" to try to back an eReader -- again, read The Everything Store)
• Prime (Amazon invented that crazy loyalty program that was poo poo'd by the press for many years)

Amazon is dangerous on many fronts.  Similar to Google and Apple.  Their inventions overlap industries (automotive, pharamceuticals, retail, energy, etc.).

The interesting cartoon (below) from Manu Cornet depicts the Amazon's work structure compared to other Tech Titans, like Google and Apple.  Despite Jeff Bezos' strong-armed CEO leadership style, I actually believe Amazon is more interwoven than depicted below.  Amazon Prime is an example of ways they cross-pollinate their innovation.  AWS is another cross-pollination story.  Kindle involves cross-pollination.  In fact, Amazon's Lab products (products like AWS and Kindle) are built to leverage the core of Amazon itself (Amazon.com).

Regardless of structure, this dominance of Prime (1 in 4 Americans) is just more proof that DIGITAL disruption happens on many fronts -- loyalty programs to supply chain to pricing and web-hosting.   It's also proof that, to be relevant, companies need to pay attention to potential competitors looming in "non-competitive" industries.  Netflix, for instance, is being attacked by Prime.  UPS, the USPS, and FedEx need to pay attention to Prime and it's potential Drone companion.  3PL's need to pay attention to Prime.  Prime, which has achievedd mass consumer lock-in, can be a launch pad for many new disruptive activities being nurtured inside Amazon.

In closing, I recommend people read this article written by Eric Jackson in Forbes in 2011 -- Six things that Jeff Bezons knew in 1997 that made Amazon a Gorilla ... . As Eric said, he based his Forbes article on a 1997 letter to shareholders which is essentially ... "a manifesto  for how Amazon has been run. ... It boils down to 6 key things that have been critical to the company’s success (and they ring true with many of the values of Steve Jobs at Apple (AAPL) and many other successful companies)."

The rest of this post is sub-quoting Eric's Forbes article:

"1. When you have a window of opportunity, go for the jugular – even if you have to exhaust a huge number of resources. 

"2. Think long-term meaning 5 – 7 years, not 5 – 7 months. 

"3. Long-term market share is more important than short-term profits because without long-term market share there will be no long-term profits.

We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations orshort-term Wall Street reactions.

We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as wemove to establish an enduring franchise.

"4. It’s ok to make mistakes but it’s not ok to be timid.

We will make bold rather than timid investment decisions where we see asufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.

"5. Obsess over Customers. As Bezos said in his Wired interview, the best customer service experience is when they never have to contact you.

"6. Be first in a big market."

_________

Jon Nordmark is co-founder of Iterate.ai which helps corporate innovators discover, curate and validate emerging technologies from startups.  100+ corporations are members, and more than 130,000 startups are indexed. Jon remains Chairman of eBags.com where was co-founder and CEO until mid-2008.  eBags.com hosts about 36 million shoppers per year.